Back to basics: For a good time, call Zappos.com

Four million pairs of shoes of all shapes, sizes, colors and trends currently reside in a warehouse in Kentucky. Twenty-four hours a day the shoes are being shipped out to consumers all across the country to the comfort of their own homes. Don't like the pair once they arrive? No problem. You can ship them back, free-of-charge. That's the allure of online retailer Zappos.com.

Tony Hsieh is Zappos.com's rising star CEO and he'll be sharing his story at the BIF-4 summit in October. His back-to-basics approach to company building has propelled Zappos to the near billion dollar mark in revenue sales.

How did he do it?

If you go back in time, 'the customer is always right' was the retailing innovation of Wisconsin-born merchant Harry Gordon Selfridge who founded Selfridge’s department store in London in 1909. This traditional business mantra, once thought to ensure good customer service, has lost some of its appeal in a retail era dominated by volume, speed, and impersonality. But Hsiehf ound a way to return to the basics of keeping the customer happy. He does it by focusing on his 1,600 employees.

“Any business depends on making sure you hire great people—passionate, smart people who are open-minded and creative,” he said during a recent BIF interview.

Most store clerks today have minimal product knowledge and scant interest in the retailing success of the companies that employ them. With the rise of online shopping and the increased number of overseas call centers, the likelihood of creating a positive customer experience seems slim. But Zappos.com refuses to settle for mediocre customer relations.

The remarkable success of the company begins with a month-long training program that indoctrinates new employees into its set of ten “core values.” After a week of training, each employee is offered a “quit-now bonus”—a week’s pay, plus a $2,000 bonus to quit now. Two to three percent of employees take the offer, and Hsieh considers the expenditure worthwhile because he knows that the remaining ninety percent are true-blue Zappos.com. They are described by pleased customers as friendly, fun, and intelligent people who listen more than they talk and who go out of their way to personalize the online footwear purchasing experience.

In Hsieh’s mind, each customer call is a branding opportunity in which Zappos.com has the full attention of the customer. This is why the happy, creative, and loyal employee is so crucial. “We don’t have scripts, and we encourage employees to let their real personalities shine when a customer calls,” Hsieh explains.

Hsieh considers himself a CEO “who likes to have fun and challenge conventional wisdom,” one who stays connected to employees and customers through Twitter, where he has attracted over 8,000 enthusiastic followers. He is refreshingly straightforward, unassuming, and entertaining in his company blog: customers can read his latest Power Point presentation or the fuzzy details of a photo shoot involving him and a pair of thigh-high boots. The “wow” experience Zappos.com hopes to offer its customers clearly starts with the CEO and filters outward. Hsieh zealously concentrates on the emotional side of the business, promoting the Zappos.com lifestyle as much as its product lines. He wants his employees to be passionate about the company to the point where they think about it during their shower and commute times.

“There is no clear separation between work and play,” he says. “At Zappos.com, employees hang out with each other outside the office, and a lot of the best ideas happen over drinks or dinner.”

All of this feel-good company culture has earned major dividends. When Hsieh took over the business in 2000, gross merchandise sales were $1.6 million a year. In 2007, they were $840 million, and the $1 billion goal Zappos.com set for itself in 2008 is in sight.

Far too often, innovation in customer service means embracing new technology. Everything from ATM’s at the register, to coupons on demand, to self-service web portals. It seems that many companies have lost sight of what legendary designer Charles Eames called the ‘particular purpose.’

Yet Tony Hsieh has done something different. He hasn't reinvented a business model - instead, he's innovated to get things right.

Don't miss Tony Hsieh share his story at the BIF-4 Collaborative Innovation Summit on October 15 and 16, 2008. Full lineup and registration details are here.

Related
Watch Tony Hsieh's recent Nightline segment Internet Shoe Shop's Unique Step

Posted July 29, 2008 by Chris Flanagan | Permalink | Comments (0)

Meet BIF-4 Storyteller Marc Ecko: Fashion icon turned business mogul (with heart)

I first met Marc Ecko last year during a symposium I attended in Providence on vocational and technical education. You might think it a strange place to be for a billion dollar fashion empire mogul but quite refreshingly, Ecko was low-key, down-to-earth, and really passionate about the youth development program he created called Sweat Equity Enterprises.

This fall, Ecko will take the BIF-4 stage to share his personal story of innovation: Although it may not be the case that everything Marc Ecko touches turns to gold, it sure does seem that way.

Cul-de-sac Street Cred
In the early 1990s, Ecko dropped out of Rutgers University, where he was studying pharmacology, to launch a clothing line with six T-shirt designs, employing his twin sister and a hometown friend. Fast-forward 15 years and Marc Ecko Enterprises includes not just a dozen lines of clothing and accessories but a magazine, a production company and a videogame that centers on a graffiti artist’s fight against authorities who want to suppress freedom of expression.

All told, global sales came to more than $1.5 billion last year. That’s not bad for a Jersey boy who started out airbrushing designs onto shirts and jackets for his school friends, and who almost folded his company when, after five years, it was $6.5 million in debt. Through it all, his trademark Rhino icon has endured.

In all his endeavors, he told us:

“The common thing that has always been in my formula for success is finding the right balance between what makes me creatively content and selfishly happy and a practical business that others will be able to appreciate. It’s finding that balance so that you’re not just designing for an elite or selling out, but doing something a little more populist and accessible that still makes you and all the people around you happy.”

Of course it helps to have antennae that are exceptionally attuned to the national zeitgeist. When Ecko was starting out, urban clothing was seen as something vaguely threatening that appealed mainly to rappers and gangsters. Ecko’s genius was in realizing that the genre held crossover appeal for the suburbs, and that he could meld various subcultures – hip-hop, skateboarders, surfers and just plain middle-class kids – that until that time rarely mixed.

Indeed, despite his attraction to such urban art forms as graffiti, Ecko’s insight into the market came from his quintessentially suburban background – his “cul-de-sac cred,” as the New York Times called it.

Urban fashion “would not be the dominant and mainstream force it is today without suburban fans,” the Times noted in a 2005 profile of Ecko. In defining his brand, the paper said, Ecko has shown a skill for navigating between ostensible opposites of “black and white, urban and suburban, heritage and novelty, new talent and established talent.”

Also important, Ecko says, is that he came of age at a time of exceptional cultural and social ferment. Some might remember the 1980s as a decade of big hair, parachute pants and bad music, but Ecko sees it as a pivotal point in American cultural life.

“To reflect on it now from the vantage point of 2008, you realize that so many things happened in the ‘80’s – the democratization of media culture, the boom of cable television, the narrative of street culture becoming accessible, the cities going into the suburbs, the war on drugs, Reaganomics, the first MTV megastars, surf wear and skate brands, the emergence of videogaming as the pastime of young males,” Ecko says. “Hip-hop was the new rock and roll. We put down the basketball and picked up the remote control. There was a hyper-awareness among white people of the narrative of people of color.”

All of these elements would come together in Ecko’s clothing designs and his other businesses. “There’s no one definitive voice for what’s cool or what’s next. It’s a convergence of elements for you to perceive what’s next or what’s coming in line and what might tip.”

Despite his success – and sometime notoriety (for instance in 2006, he released a video that seemed to show him “tagging” Air Force One with graffiti reading “Still Free”; the video was so realistic that the Pentagon had to issue multiple denials after the incident received serious news coverage) Ecko remains down-to-earth and serious. To help those less fortunate, he founded the Tikva Children’s Home, an orphanage in Ukraine, as well as the previously mentioned Sweat Equity Enterprises, a design and innovation laboratory that aims to redefine vocational education.

Image: Sweat Equity kids, photo from Fast Company article

Designed to take the stigma out of vocational educational programs, Sweat Equity takes New York high school kids and matches them with brands such as RadioShack and New Era to research, develop, prototype and eventually manufacture products.

From a recent AdWeek profile, Ecko said: "After seeing things that were vocationally oriented were too industrial, that were not teaching the right skill set to our labor force, I thought maybe we could rebrand the idea of vocational education. The idea is one part Willy Wonka and one part The Apprentice tweaked for high school kids."

At the end of the day, Ecko doesn't measure success in his life or at the end of the year by his sales figures. “The struggles in the early years – getting in debt, making business mistakes – gave me a great sense of groundedness,” he says. “I’m doing what I can to try to get a little bit of insurgency going among my peers, get them to think about the larger issues.”

Don't miss Marc Ecko share his story at the BIF-4 Collaborative Innovation Summit on October 15th and 16th. Early registration ends August 15th. Our full line-up and registration details are here.

Posted July 16, 2008 by Chris Flanagan | Permalink | Comments (0)

Meet a pioneer in surgical robotics and telemedicine: Dr. Richard Satava

I spent the holiday weekend with a close friend from Minnesota who is a physician. I happen to have a BIF-4 flyer lying around (ha-ha) and mentioned to my friend that Dr. Richard Satava was going to be one of our storytellers at the summit in the fall. Initially, the name didn't mean anything to her. Then I said he co-developed the first surgical robot. That's when her eyes lit up: "that's a serious game-changing surgical technology," she said.

I've profiled many storytellers over the years. Satava is prone to neither hyperbole nor rhetoric - but honestly, it's hard to tame down his story.

He's done many things in his life – from deciding which cutting-edge medical technologies the U.S. military will pursue, to saving lives as a surgeon in the heat of battle, to teaching surgery at Yale and the University of Washington, to serving on the White House Office of Science and Technology Policy – yet he would have you believe that all his accomplishments stem from one thing: failure.

Failure Begets Purpose
In January 1958, when the United States launched its first satellite, Satava decided he wanted to be the first doctor to perform surgery in space. Later in his life, trying to make that dream a reality, he became an army astronaut candidate three years in a row but failed to make the grade.

So working instead at Stanford University and NASA, Satava helped build the first surgical robot, reasoning that even if he couldn’t perform surgery in space perhaps his creation could. He continued work on the robot after he joined the military’s Defense Advanced Research Projects Agency (DARPA); the technology ultimately was commercialized as the da Vinci Surgical System.

(Image is the daVinci Surgical Robot)

His work on advanced medical technologies eventually brought Satava into contact with computer scientist Jaron Lanier, who was working on a “virtual reality” concept that at the time must have seemed like something out of science fiction. Satava helped support the research that eventually led to the first virtual reality simulator.

“As I went along, it’s just that one failure led to the next led to the next,” says Satava. “I couldn’t go up into space and do the first surgery, so I had to find another way to do it. You go through one failure after another, and finally you get things done.”

It helps, of course, if you have a clear picture of where you’re going. From an early age, Satava set his sights on becoming a surgeon. Drafted into the military, he served four years in Heidelberg, Germany. He loved the opportunities that the army provided and decided to build a career out of it. In addition to stints in the surgery departments of Ford Ord, Calif., and Fort Gordon, Ga., Satava served as chief of surgery for a MASH unit during the 1983 invasion of Granada and as commander of an evacuation hospital in Saudi Arabia during 1991’s Operation Desert Storm.

“For a surgeon, especially a medical surgeon, the greatest experience you can have is to take care of your fellow soldiers during combat. It’s incomparable,” he says.

It was after Desert Storm that Satava joined DARPA as program manager in advanced biomedical technology; today, in addition to teaching and practicing surgery in Seattle, he is senior science advisor at the U.S. Army Medical Research and Materiel Command. Both at DARPA and in his current Pentagon role Satava’s work has involved “technology harvesting” – identifying new technologies that have the potential to change the face of medicine and bringing them under the military’s funding and research umbrella.

“What I have that other people don’t have is access to dozens if not hundreds of these advanced technologies,” he says.

To read Satava’s presentations is to glimpse a future in which robotics and other advances have radically transformed medicine as we know it: military dog-tags embedded with complete CT scans of each soldier, which medics or surgeons can refer to as a baseline if the soldier is injured; surgery performed remotely via robots managed from a surgical console; virtual reality training for surgeons; biosurgery that manipulates genetic material or operates directly upon genes; synthetically grown tissue and organs; intelligent prostheses; a completely automated operating room without any human medical personnel present.

About two-thirds of the new systems Satava describes in his papers are already in use in the military, he says; the rest are still being perfected in the laboratory and will be available in coming years.

“None of this is a dream. I don’t write anything down that I don’t have hard scientific proof on,” Satava says. “The question is which ones are going to move into the hospital or the battlefield and which ones aren’t going to make it.”
One of the main people providing an answer to that question is a man who never wavered in his childhood dream to be on the cutting edge of surgery. Failure, it seems, has never been so successful.

Don't miss Dr. Richard Satava at the BIF-4 Collaborative Innovation Summit on October 15th and 16th. For our full line-up and registration details, head here. (Don't delay - early registration discount ends August 15th.)

Related
For a glimpse into the future and a deep-dive into Dr. Satava's work, check out his web page which contains links to all his recent papers and presentations. They're mind-blowing!

Posted July 09, 2008 by Chris Flanagan | Permalink | Comments (0)